Chapter 7 Bankruptcy (Liquidation)
Liquidation under Chapter 7 of the bankruptcy code involves the surrender and dissolution of your assets that are not exempt (under Georgia Bankruptcy Exemptions) for the purpose of paying your creditors. After filing bankruptcy, a trustee is appointed who is responsible for collecting the nonexempt unencumbered assets, turning them into liquid form, and making distributions to creditors who have proved a claim. The funds are paid out to creditors in the Bankruptcy Code’s order or priority.
In most cases, creditors who hold non-priority undersured claims, receive either only a small fraction or none of their claim. Following this dissolution of nonexempt assets and then distribution of those assets to the creditors, the unpaid balance is usually discharged (the forgiveness of the balance of debts that are not paid in full in the bankruptcy case).
Chapter 7 Eligibility
Chapter 7 Bankruptcy eligibility for an individual, whose debts are primarily consumer debts, is limited by the requirement of the court to dismiss a Chapter 7 case if it finds that the granting of relief would be an abuse of Chapter 7. Abuse is presumed if an individual consumer debtor has disposable income deemed sufficient to make payments under a Chapter 13 plan. The determination of whether or not an individual has sufficient income to pay under a Chapter 13 case has come to be known as the “means test.”
Bankruptcy, under Chapter 7, is not available if the individual has filed a Chapter 7 bankruptcy case within the preceding 180 days. In addition, Chapter 7, or any other chapter of the Bankruptcy Code, is unavailable to an individual unless they have received credit counseling from an approved agency within 180 days before filing.
